Churn management

How do you calculate churn, and what is a good churn rate?

To calculate your subscriber churn rate, use this formula:

Churn Rate = (Total Lost Customers / Customers in the Time Period) x 100

Whether your churn rate is good or not depends on your industry and company type. Findings from Recurly’s benchmark report show that a 4% monthly churn rate is considered a good benchmark.

Direct-to-consumer (DTC) merchants face higher churn rates than business-to-business (B2B) providers.

When discussing churn benchmarks, it’s important to determine your revenue churn rate — the percentage of revenue lost to churned customers — to get the full picture. Here’s how your revenue churn rate is calculated:

Revenue churn rate = (Revenue Lost to Churn / Total MRR in the Period) x 100

This is a more accurate indicator of success if your business offers multiple products or tiers.

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How do you analyze customer churn?

To analyze customer churn, you should:

• Determine when you’ll consider a customer to be “churned” (is it after an official cancellation or could it be another scenario, like a 6-month pause?)
• Choose a timeframe to analyze (this can be monthly, quarterly, yearly, etc.)
• Calculate your customer churn rate and revenue churn rate
• Separate voluntary and involuntary churn
• Break both groups into smaller cohorts based on your goals
• Find patterns within the cohorts that point to pain points

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How can you reduce subscriber churn?

Churn management comes down to two key strategies: using proactive tools to prevent involuntary churn and engaging customers strategically to avoid cancellations. Start by understanding the reasons behind subscriber loss, then act early to re-engage customers before they decide to leave. Flexibility — like subscription pause options or easy plan adjustments — can be a powerful retention tool. Analyze subscriber data to identify and nurture at-risk subscribers early on, and use smart tools to prevent failed payments before they lead to involuntary churn.

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What is involuntary churn vs. voluntary churn?

When you think of churn, you likely picture subscribers who cancel on purpose — but that’s just part of the story. Voluntary churn happens when a subscriber actively cancels their subscription, often due to dissatisfaction. Involuntary churn, however, occurs when a payment fails and the subscription is unintentionally terminated. It’s not about how they feel about your service, and it can be prevented with the right payment tools.

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What is churn prediction?

Churn prediction is the strategy subscription businesses use to identify which customers are at a high risk of leaving based on their behaviors.

While no one can predict the future with perfect accuracy, Recurly Engage provides a clear advantage. It’s designed to give you a granular, real-time view of customer engagement, so you can identify the signals of voluntary churn and act on them. Here’s how it helps:

• Track usage trends: Go beyond a single data point. Engage allows you to see if a customer’s activity—like logins or specific feature use—is trending downwards over time, a powerful indicator of fading interest.
• Plan downgrades: Recognizing subscribers who move to a lower-tier plan, which can often be a precursor to canceling
• Build hyper-targeted segments: Combine these signals into precise, rule-based segments. For example, you can create a dynamic list of users whose usage is trending down and who have recently downgraded, allowing you to focus on your most at-risk cohort.

Why is this important?

The goal isn’t just to identify these segments — it’s to save them. Once an at-risk segment is defined in Recurly Engage, you can launch targeted campaigns with personalized offers, discounts, pause capabilities, or other messages designed to win them back and prevent churn before it happens.